The federal government has projected gross financing needs of Rs. 28.647 trillion for fiscal year 2026 to 2027 and plans to meet most of its Rs. 7.02 trillion fiscal deficit through domestic borrowing.
The government has assumed an exchange rate of Rs. 290 per dollar for fiscal year 2027. The borrowing plan cautioned that its successful implementation will depend on the macroeconomic and geopolitical environment and continued fiscal discipline.
According to the Annual Borrowing Plan for fiscal year 2027 prepared by the Debt Management Office, the government plans to raise Rs. 6.046 trillion through net domestic borrowing, while net external financing is projected at Rs. 813 billion. Another Rs. 161 billion is expected from privatization proceeds.
The government plans to reduce its reliance on short-term Treasury Bills and increase borrowing through medium- and long-term instruments to lower refinancing risks and extend the maturity of public debt. Net issuance of Pakistan Investment Bonds is projected at Rs. 4.58 trillion, with fixed-rate PIBs expected to account for more than half of new issuances.
The plan also includes around Rs. 3.785 trillion in Government Ijara Sukuk, Bai Muajjal and short-term Sukuk. Gross Sukuk issuance is projected at about Rs. 6.6 trillion during the fiscal year following the introduction of Hybrid Sukuk and three and six month short term Sukuk.
The government also plans to introduce a 20 year fixed coupon bond after consultations with stakeholders. It intends to replace the existing 10 year zero coupon floating rate instrument with a 10 year fixed rate instrument.
The borrowing requirements come as the government faces Rs. 21.627 trillion in debt maturities during fiscal year 2027. These include Rs. 17.096 trillion in domestic maturities and Rs. 4.531 trillion in external repayments. Combined with the fiscal deficit, these requirements bring total gross financing needs to Rs. 28.647 trillion.
Domestic debt maturities are estimated at around Rs. 17 trillion, including Rs. 11.1 trillion in Treasury Bills, Rs. 3.1 trillion in PIBs and Rs. 1.9 trillion in Government Ijara Sukuk. A significant portion of Treasury Bill maturities falls in the first two quarters of the fiscal year.
For external financing, the government projects net external financing of $2.804 billion. Multilateral sources are expected to provide a net inflow of $1.58 billion, while the government plans to raise around $2 billion through international bonds, subject to favorable market conditions.
Total external inflows are estimated at $13.378 billion against outflows of $10.574 billion. The government also plans to refinance existing foreign commercial bank loans and explore new financing options where better terms and pricing are available.
External debt principal maturities are estimated at $15.6 billion, including $7 billion in bilateral deposits expected to be rolled over. Multilateral maturities are projected at $5.3 billion and commercial lender maturities at $3.3 billion, while no Eurobond maturities are expected during fiscal year 2027.
The borrowing plan comes with public debt standing at Rs. 86.7 trillion at the end of June 2026, comprising Rs. 59.4 trillion in domestic debt and Rs. 27.3 trillion in external debt. The Debt Management Office said the average maturity of the debt portfolio increased from 2.7 years in June 2024 to 3.8 years in June 2026, with a target of 4.2 years by fiscal year 2028.
The government also plans to continue liability management operations, including debt buybacks and switches. Such transactions totaling Rs. 4.7 trillion have been conducted since September 2024.
Under the plan, Market Treasury Bills are expected to record negative net issuance of Rs. 2.592 trillion, while PIBs are projected to have net issuance of Rs. 4.58 trillion and Sukuk related instruments Rs. 3.785 trillion.
The plan also proposes restructuring the Central Directorate of National Savings through improved products, market based pricing and digitization, alongside efforts to increase retail participation in government securities.
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